22 May 2017 hi..boss some of my friends say no need to take gst registration only if my turn over less than 50 lac as it's small scale sector...does it fall under sevice sector or...works contract thanks

Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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26 July 2024 For your business of a photocopy shop with a turnover between ₹20 lakh and ₹50 lakh, here's a detailed overview of the GST implications and requirements:

### **1. **GST Registration Requirement**

#### **A. **Turnover Threshold**

- **Turnover Below ₹20 Lakh**: For businesses with a turnover below ₹20 lakh (₹10 lakh for Special Category States), GST registration is not mandatory.
- **Turnover Between ₹20 Lakh and ₹50 Lakh**: You are required to obtain GST registration if your turnover exceeds ₹20 lakh.

**In your case, since your turnover is more than ₹20 lakh but less than ₹50 lakh, you are required to obtain GST registration.**

#### **B. **Opting for Composition Scheme**

- **Composition Scheme**: If your turnover is below ₹1.5 crore, you may opt for the Composition Scheme, which simplifies GST compliance but restricts the input tax credit. However, this is a voluntary option and not a requirement based on turnover alone.

### **2. **GST Rate on Goods and Services**

#### **A. **GST Rate on Paper**

- **Paper**: The GST rate on paper is generally 12%. This rate is applicable when you purchase paper for your business.

#### **B. **GST Rate on Photocopy Services**

- **Photocopy Services**: The GST rate on photocopying services typically falls under the service category, and the applicable rate is 18%.

### **3. **Classification of Your Business**

- **Service Sector**: The business of providing photocopying services falls under the service sector, not under works contract.

### **4. **GST Impact on Your Business**

#### **A. **Input Tax Credit**

- **For Paper**: As a registered dealer, you can claim input tax credit (ITC) on the GST paid for purchasing paper used in your photocopying business.
- **For Photocopying Services**: Similarly, if you provide services and collect GST from your clients, you can offset the GST paid on inputs with the GST collected on your services.

#### **B. **Filing and Compliance**

- **Monthly Returns**: You will need to file monthly GST returns (GSTR-1 for outward supplies and GSTR-3B for summary of outward and inward supplies).
- **Annual Returns**: You must also file an annual return (GSTR-9) and, if applicable, an annual audit (GSTR-9C).

### **5. **Steps to Take**

1. **Obtain GST Registration**: Since your turnover is above ₹20 lakh, you must register for GST.
2. **Maintain Records**: Keep detailed records of all transactions, including purchases of paper and sales of photocopying services.
3. **Invoice Management**: Issue invoices with the appropriate GST rates (12% for paper and 18% for services) and maintain proper documentation.

### **6. **Example**

**Scenario**:
- **Turnover**: ₹30 lakh
- **Purchase**: Paper costing ₹1,00,000 with GST @ 12%
- **Sale**: Photocopying services worth ₹5,00,000 with GST @ 18%

**GST on Purchases**:
- **GST on Paper**: ₹12,000 (12% of ₹1,00,000)

**GST on Sales**:
- **GST on Services**: ₹90,000 (18% of ₹5,00,000)

**Input Tax Credit**:
- **Claim ITC**: ₹12,000 on paper.

**Output GST**:
- **Payable GST**: ₹90,000 on services.

**Net GST Payable**:
- **GST Payable**: ₹90,000 (Output GST) - ₹12,000 (ITC) = ₹78,000.

### **Summary**

- **GST Registration**: Mandatory for turnover above ₹20 lakh. You need to obtain GST registration.
- **GST Rates**: Paper is taxed at 12%, and photocopying services are taxed at 18%.
- **ITC**: Available on paper purchases and can be used to offset GST on services provided.
- **Compliance**: Ensure timely filing of GST returns and maintenance of proper records.

By registering for GST and complying with the requirements, you can benefit from input tax credits and streamline your business operations under the GST regime.